How to Invest in Cobalt ETFs 2024 Step-by-Step
Experts seem to believe that future growth for cobalt demand will be substantial. A massive demand driver is the lithium-ion battery market, thanks to the surge in electric vehicles and other electronics. If you’re looking to invest in cobalt, it’s essential to know the status of its supply and demand. Since 50% of cobalt production is nickel-related and 35% copper-related, cobalt production falls when mining for nickel and copper drops. The metal’s use in lithium-ion batteries accounts for more than 62% of the world’s consumption in 2020, with cobalt demand from the battery sector expected to rise 5-10% year-on-year in 2020. Analysts predict this demand will steer the cobalt market even further in the following years.
If you want to skip our detailed analysis of these stocks, go directly to 4 Best Cobalt Stocks to Buy Now. The Impact Investor is a blog focused on helping retail investors find ESG, socially responsible, and impact investment opportunities through our expert insights, tips, and blog posts. Striving to marry financial prudence with positive societal impact, Kyle imparts practical strategies for saving and investing, agile team facilitation icp-atf training course underlined by a robust ethos of conscientious capitalism. His ambition transcends personal gain, aiming instead to spark transformative global change through the power of responsible investment. While cobalt is mined around the world, some of the largest producers are in politically unstable areas. The Democratic Republic of Congo alone produced 74% of all cobalt in 2021, according to the Cobalt Institute.
In 2022, cobalt demand grew by more than 33% year-on-year, mainly because of a rise in EV demand. In the next ten years, the demand for the metal will register a compound annual growth rate of more than 14%. The growth of the cobalt market has also been held in check because of geographic monopolies. For example, nearly 70% of mined cobalt, used in EV batteries around the world, comes from the African nation of Congo.
Your investment style can dictate which kind of fund is best for your portfolio. Investors can buy and sell physical cobalt, but it comes with storage, transport, and security issues. Therefore, trading cobalt ETFs provides a convenient alternative. Kyle Kroeger, esteemed Purdue University alum and accomplished finance professional, brings a decade of invaluable experience from diverse finance roles in both small and large firms. An astute investor himself, Kyle adeptly navigates the spheres of corporate and client-side finance, always guiding with a principal investor’s sharp acumen.
- As noted, the lithium-ion battery market will be a huge driver of that demand, with battery production rising due to the expected surge in EV purchases.
- It isn’t a significant revenue generator for Vale, but the company is nonetheless worth mentioning, given its status as a top miner of basic metals used in all sorts of industries.
- The fund focuses more on battery technology, which is a key driver of cobalt demand.
Wheaton has a market cap of around $18 billion, with $1 billion in revenue in December 2020. If impact investors wish to invest in cobalt sustainably, they must do so while applying due diligence, considering the upstream risks and downstream cobalt supply chain expectations. Before dabbling in e cobalt investments, here’s everything you need to know about the upstream and downstream cobalt supply chain according to the Principles of Responsible Investment.
Rio Tinto Group (NYSE:RIO)
Cobalt futures began trading in 2010 and are quoted in US dollars per tonne. You’ll find contracts that range over 15 months, which will allow you to make bets over different periods. If you’re an investor, the best way to take advantage of this situation is to purchase shares in companies that mine copper and nickel, and by default, also cobalt, worldwide. The boom in electric vehicles is just beginning, and it’s unlikely that the demand for cobalt will wane in the following years.
As of early 2023, cobalt stocks comprised almost 9% of the fund’s investments. It also counted notable cobalt producers BHP Group and Glencore among its top five holdings. One of the world’s largest mining companies, BHP Group is an Australian-based company with operations all over the globe.
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However, it does own shares of top global mining companies like BHP Group and Glencore, which produce some cobalt. Cobalt is a rare, silvery-blue metal that is used in a variety of applications, including batteries, electronics, and aerospace. The largest cobalt producer in the world is the Democratic Republic of Congo, which is responsible for over 60% of global cobalt production. Other major cobalt producers include Russia, Australia, and Canada.
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Since cobalt is a byproduct of other mining activities, investing directly in the element outside of specific mining stocks isn’t easy. Cobalt prices are also likely to be volatile as supply and demand change from year to year. Investing in an ETF, along with other metal and base materials stocks, could be a top way to play this key ingredient in electric vehicles and batteries.
This process involves using toxic chemicals and practices that make cobalt mining an environmental disaster. Cobalt is often found in proximity to uranium which can exacerbate the environmental harm of extraction. This company based in Australia offers industrial treatment water services and metal recovery.
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As noted, the lithium-ion battery market will be a huge driver of that demand, with battery production rising due to the expected surge in EV purchases. SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Cobalt is a widely used industrial metal that has applications in a wide range of modern technologies.
A conflict in the region has made cobalt prices more volatile in the past few months. The value of the asset or portfolio depends on the value of the traded ETF. As such, they are a great way for investors to gain exposure to investment vehicles, as they are not limited to traditional common stocks when they can be traded. This Brisbane-based mining firm focuses on developing and mining metals for emerging technologies, with interests in cobalt-scandium-nickel projects in Australia. It has a market cap of around $63 million and annual revenue of around $17 million.
However, more recently, demand from high-tech sectors has overshadowed traditional cobalt uses. Today, this critical metal is an essential ingredient in electric vehicle (EV) batteries, energy storage systems, metal alloys and more. One is for lithium-ion batteries, especially ones in EVs (electric vehicles). The metal is also used in car engines, jet turbines and turbine generators, airbags, enamel for steel products, and even as a drying agent in paints. The ProShares S&P Global Core Battery Metals ETF is a relatively new fund that started trading in late 2022.
She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor’s degree in English draw fib retracement education as well as a master’s degree in the teaching of writing, both from Humboldt State University, California. It’s tough to say exactly how much demand will increase in the coming years, but many experts agree growth will be substantial.
Unfortunately, most ETFs, including those related to cobalt mining, do not pay dividends. The next step is to prepare to trade cobalt ETFs by transferring money into your account. Commonly available funding methods include bank transfers, debit or credit cards, and should you invest in bitcoin transaction services like PayPal. Hailing from a lineage of industrious Midwestern entrepreneurs and creatives, his business instincts are deeply ingrained. This background fuels his entrepreneurial spirit and underpins his commitment to responsible investment.
By doing your research, making solid investing decisions, and using a regulated brokerage like Interactive Brokers, you maximize the safety and success chance of your investment.
